Lumber prices fell 4% to a new 2022 low on Tuesday as higher mortgage rates speed along a housing downturn. The in-demand building commodity fell to $465 per thousand board feet on Tuesday following the Goldman Sachs forecast for declining home sales throughout the remainder of 2022. The bank expects existing home sales to fall 12% in August, and it also predicted that the current market slowdown will persist into 2023, Insider reports.
Despite jumping to a record high of $1,733 per thousand board feet in 2021, lumber prices have historically traded between a range of $200 to $600 per thousand board feet, and the current $465 rate could fall further if the housing market returns to its pre-pandemic state.
While the decline in lumber may be seen by some as a positive sign that inflation is continuing to cool, it is also indicative of a housing market slowdown that may last longer than expected.
And Goldman Sachs expects just that, as it argued in a Tuesday note the home sales are set to decline further after already cooling significantly since the Fed began its interest rate hikes, which sent mortgage rates soaring above 5%.